August 25, 2023

Myanmar regime looks to restart hydroelectric project in northern Shan State

Myanmar Now

A large-scale hydropower project stalled since state-owned French company Électricité de France (EDF) pulled out of Myanmar in 2021 over concerns about the regime’s human rights abuses may soon restart if the junta has its way.

The regime’s Ministry of Electric Power has recently called for a tender to resume the Shweli (3) project, as the third hydropower project on the Shweli River in northern Shan State is known.

According to a tender notice published on August 17, private investors can purchase tenders for 500,000 kyat between August 21 and September 11 and must submit their project proposals by November 24.

First conceived during the time of former dictator Than Shwe, the Shweli (3) project did not really start to move forward until 2018, when the then National League for Democracy government entered into a Notice to Proceed agreement with EDF in partnership with Japan’s Marubeni Corporation and Myanmar’s Ayeyar Hinthar Company.

Located some 12 miles north of the town of Mongmit (Momeik) in northern Shan State, the US$1.5 billion project was designed to produce 670 megawatts of electricity. It was expected to be completed by 2025, but has been on hold since EDF announced that it was pulling out in March 2021, a month after the military seized power.

The decision to try to restart the project comes after the regime appointed a new minister of electric power earlier this month. That move came as the junta extended the state of emergency under which it holds power for an additional six months from August 1.

According to a retired director of the ministry, up to five groups of companies have submitted letters of interest behind the scenes. However, he added, the tender process is just a sham.

Most likely, the project will go to a Russian company with ties to top generals, including Lieutenant-General Nyo Saw, chair of the military-owned Myanmar Economic Corporation, he said.

“I think the Russian company will win the project,” he said, adding that “Shweli (3) is a very good project.”

A ceremony held in September 2018 to mark the signing of an agreement to start work on the Shweli (3) hydropower project

Dependency on Russia

He noted, however, that Russian companies are unlikely to have billions of dollars to invest in such a project, and that they also lack experience with hydropower projects.

“Russia does not have much money, and it isn’t really a developer,” he said.

Despite this, however, the regime has become increasingly dependent on cooperation with Russian governmental agencies and companies to implement its development projects. Shunned by most Western countries since the coup, it has signed deals with the Russian state-owned Rosatom company and others to try to meet the country’s energy needs.

Russian president Vladimir Putin and Myanmar junta chief Min Aung Hlaing in Vladivostok, Russia, in 2022

In April of this year, another company associated with the Shweli (3) project announced that it was also pulling out of Myanmar. AFRY, a Sweden-based engineering and design company, said it had been involved in the country for more than 20 years, but would leave by the end of this year at the latest “due to the negative development in the country” since the coup.

In February 2010, Switzerland’s Colenco Power Engineering (now owned by AFRY) signed an agreement with the regime of former dictator Than Shwe to do consultancy work for the Shweli (3) project. Two months later, the senior general toured the site of the project with his energy ministers, Htoo Company owner Tay Za, and then Lieutenant General Min Aung Hlaing, who went on to become Than Shwe’s successor as commander-in-chief of the armed forces and head of the current junta.

The Swiss company originally estimated that Shweli (3) could generate up to 1,050 megawatts of electricity, but by the time EDF became involved, this was reduced to 670 megawatts due to the presence of two other projects—one completed and the other planned—on the upper part of the river, Shweli (1) and Shweli (2).

A feasibility study for the Shweli (3) project estimated that it would take at least six to seven years to complete, according to the retired Electricity Ministry director. But that would only be possible if there were no funding issues or other delays, he added.

Diminished capacity

It’s unclear if the regime will be able to follow through on its plans for Shweli (3). In July of last year, it called for tenders to implement six hydropower projects, but it is not known if there were any takers.

Meanwhile, Min Aung Hlaing has made bold statements about plans to introduce electric trains and cars powered by wind, solar and even nuclear energy. But far from making a leap forward in terms of energy use and production, Myanmar remains mired in perpetual shortages that have only gotten worse over the past two and a half years.

In the immediate aftermath of the 2021 coup, the country’s capacity approached nearly 4,000 megawatts, but by April 2023, it had dwindled to around half that amount.

Predictably, the regime has blamed its opponents for its failure to meet the country’s energy needs, accusing anti-junta guerrilla groups of attacking and destroying power plants, power lines and substations. By May of this year, some 200 such attacks had been reported across the nation. 

Another cause of the problem, according to Min Aung Hlaing, was the suspension of large hydropower projects under previous administrations.

But even as he continued to make excuses, in early August the junta leader was forced to admit that under his rule, Myanmar has been unable to meet even half of its energy needs, making it likely that he will push hard to get Shweli (3) and other projects back on track.

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